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Solutions

Solutions

We must be proactive in addressing the national debt in order to secure our future

The good news is that there are many solutions right in front of us.

Budget experts across the political spectrum have devised specific policy proposals to tackle our long-term fiscal challenges – underscoring that there are multiple pathways to putting our nation’s debt on a sustainable course to ensure long-term prosperity, growth, and opportunity.

For example, the American Action Forum’s proposal called for slowing the growth of entitlement spending by replacing Medicare with a premium support program, fostering competitive bidding in Medicaid, and raising the retirement age for Social Security. The plan would replace the income tax system with a progressive consumption tax and raise additional revenues through comprehensive immigration reform.

The American Enterprise Institute called for converting Medicare into a premium support program and Medicaid into a block grant to the states, slowly replacing the Social Security program with a flat benefit supplemented by private retirement accounts, gradually increasing the eligibility age for Social Security and Medicare, while increasing defense spending. On the revenue side, AEI proposes to replace the income tax system with a progressive consumption tax, impose a carbon tax, and raise the gas tax.

Meanwhile, the Bipartisan Policy Center advocated entitlement reforms that protect low-income individuals while reducing benefits for high-income people. BPC also proposes a revenue-generating overhaul of the income tax system that lowers tax rates and reduces tax expenditures, a carbon tax, higher gas taxes, and immigration reform.

The Center for American Progress formulated a plan to slow the growth of healthcare spending by imposing stricter cost controls, while increasing spending on low-income people, infrastructure, and education and reducing defense spending. The plan would also raise revenue with additional taxes on high-income people, a carbon tax, higher gas taxes, and immigration reform.

Finally, the Economic Policy Institute proposed a sharp and sustained boost in nondefense spending on infrastructure, education, training, and income support programs, while creating a public health insurance option. To pay for those changes and put the budget on a sustainable path, EPI proposed stricter health care cost controls, reductions in defense spending, tax hikes on the wealthy, imposition of a carbon tax, fees on big banks, and a higher gas tax.

Each organization’s proposal significantly reduced projected debt levels over the next two decades, effectively stabilizing the debt and putting the nation on a sustainable fiscal path.

Learn More

Interested in a deeper dive? Play the Fiscal Ship, a project of the Brookings Institution’s Hutchins Center on Fiscal & Monetary Policy and the Wilson Center, and see how your policy preferences would affect our debt outlook. To learn more about how specific policy areas relate to the national debt, check out the resources below.